Arvind SmartSpaces Limited (ARVSMART) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q2 FY '24 Earnings Conference Call of Arvind SmartSpaces Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Amit Sharma from Adfactors PR. Thank you, and over to you.

Thank you very much. Good morning, everyone, and thank you for joining us on the Q2 and H1 FY '24 Results Conference Call of Arvind SmartSpaces Limited. We have with us here today on the call Mr. Kamal Singal, Managing Director and CEO; Mr. Ankit Jain, Chief Financial Officer; Mr. Avinash Suresh, Chief Operating Officer; Mr. Prakash Makwana, Company Secretary; and Mr. Vikram Rajput, Head of Investor Relations. Please note that a copy of the disclosure is available on the Investor section of the website of Arvind SmartSpaces Limited as well as on the stock exchanges. Please do note that anything said on this call that reflects the outlook towards the future, which would be construed as forward-looking statements must be reviewed in conjunction with the risks that the company faces. I would like to now hand over the call to Mr. Kamal Singal for his opening remarks. Over to you, sir. Thank you.

Thanks a lot, and a very good morning to all of you who are present on this call. Thank you for joining us today to discuss operating and financial performance of Arvind SmartSpaces for the second quarter and also for the half year ending 30th September 2023. Diwali is around the corner, and I wish you all a very, very Happy Deepawali and a Prosperous New Year. And my wish also are there for the Indian Cricket Team. I hope the boys lift the trophy once again in the second half of this month post-Deepawali. I would like to begin by sharing my thoughts on the real estate environment and broad highlights for the quarter, and then we'll look forward to your questions on anything that you wanted to ask. The Indian real estate industry's path is filled with promising potential. Predictions indicate the industry will touch a $1 trillion mark by 2030 and thus strengthening its role as a major contributor to nation's economy. The industry is harvesting the power of technology, embracing sustainable practices and adapting to the ever evolving market dynamics. The Indian real estate market has entered a secular upcycle given the factors like increase affordability, rise in salaries or stabilizing of mortgage rates, et cetera, et cetera. And this trend is expected to persist over the next few years, which is expected to then sustain a healthy level of demand across various segments of real estate as an Industry. Every major city of the country is experiencing very, very robust demand and high volume of sales affirming the industry's improving outlook in general. This is especially true for progressive and branded players in the industry with very good business practices and governance structures in place. Both government and real estate developers are taking proactive measures to expand availability of quality living spaces for the consumers in general. Consolidation, scaling up, et cetera, are some of the features of this upcycle, which is separating the wheat from the chaff. And leaders like Arvind SmartSpaces are driving very robust business development, seeing a pickup in launches, growing cash flows, diversifying across products and markets and witnessing market share gains, et cetera, and delivering sustainable growth in the medium and long term. At Arvind SmartSpaces, our transformative approach was beyond peripheral shifts. It goes deeper into design aspects, facilitation of changing living habits to create an optimum experience to our consumers. This has in turn supported our objective to bridge the gap between what the consumers want and what the developers are looking to supply. As a result, our business model is deriving sustainable growth while using organizational resources optimally to generate healthy returns and cash flows. Coming to the quarter. In Q2 24, we have indeed witnessed outstanding results. Our sales has surged to new heights, registering a remarkable 95% year-on-year growth for the quarter, reaching an impressive INR 369 crores for this quarter. This substantial growth can be largely attributed to successful launches during the quarter. These new launches have not only strengthened our sales momentum but have also set a new milestone for us with quarterly sales crossing INR 300 crore mark for the very first time. One of the standout achievement of this quarter was the introduction of Uplands 2 and Uplands 3 at Village called Adroda in South Ahmedabad. We have been doing quite a bit of work in West and North Ahmedabad henceforth, but this is our first project in South and hence, it's all the more important. The response from our customers was nothing short of exceptional. We managed to secure sales of around INR 300 crores in just 3 days selling out the entire Phase 1 of this project in 3 days, which encompasses approximately more than 4 million square feet of plotted development. This is a clear indication of the trust and confidence that our customers had in our brand and the quality of our offerings. We're also happy to report that our collections during the quarter reached a new milestone. We recorded highest ever quarterly collections with substantial 133% year-on-year growth amounting to INR 263 crores for the quarter. This achievement is especially significant as it marks the highest ever quarterly collections for the fourth consecutive quarter. This trend underscores our ability to maintain a strong operating cycle, aligning our sales, construction and delivery process effectively. Furthermore, if we look -- when we look at the overall performance for the quarter -- for the first half of this fiscal year, we have achieved a record-breaking half yearly sales, which exceeds INR 500 crores and to be precise INR 504 crores, which represents a remarkable 64% year-on-year growth. Additional, our half yearly collections have also reached an all-time high, standing at INR 467 crores and showing a substantial year-on-year growth of 90%. We have also achieved an important milestone by successfully concluding first platform with HDFC Capital Advisors through HCARE-1 fund. The platform delivered a strong returns in 2.5 years of its operation. And we are delighted about the positive impact this has had on our stakeholders. In addition, from the -- in addition, from the operating standpoint, we've expanded our footprint by acquiring a new residential high-rise project in Bangalore. The project is located at Bannerghatta Road and marks our geographical expansion into the city and this key market of South Bangalore. This project comes with a top line of around INR 400 crores, further enhancing our business development potential. With this addition, our total business development potential for the financial year now stands at an impressive INR 2,800 crores for the year. We remain on track to meet our goal of investing INR 1,000 crores, making this a record year for our new project pipeline. Now moving from operational updates to the financial highlights. H1, we have reported a revenue of around INR 140 crores, up 26% on a year-on-year basis. EBITDA for H1 grew by 73% to INR 36 crores. PAT for H1 grew 38% to INR 17 crores. And in Q2, we reported revenue of INR 73 crores, up 44% year-on-year and EBITDA grew by 177% to INR 20 crores. PAT for the quarter grew 79% to INR 9 crores for the quarter. Our balance sheet position remains very strong despite expanding operations. Net debt decreased to INR 141 crores, means we had surplus of INR 141 crores in the balance sheet as on 30th September 2023, from a net debt of around INR 87 crores minus or negative, which existed as on 30th June 2023. A crucial parameter in the real estate reflecting the underlying business performance quite well is the operating cash flows. During the quarter, operating cash flows amounted to INR 160 crores. And we closed the quarter with a net cash position of INR 26 crores. Operating cash flows during the first half stood at INR 271 crores. This means INR 160 crores for this current quarter and INR 111 crores for the previous quarter and put together the number stands at INR 271 crores of operating cash surplus that we generated for this year as a whole in the first 6 months. We estimate an unrealized operating cash flow exceeding INR 2,205 crores from the ongoing project pipeline. As you would have noticed in our presentation, we have very recently pre-launched Sarjapur project, this project we've been talking about in the last few calls. The project is named Forest Trails. This is a premium villa project with 1.2 kilometers of forest trail for walking and jogging and some of the finest of the amenities for the micro market and in general. We look forward to deliver an exceptional experience to our customers in Bengaluru. And this is going to be our biggest villa project in Bangalore thus far. To conclude, real estate industry's demand and supply dynamics remains very robust. The ongoing trends of consolidation and corporatization is further enhancing the outlook for branded players. Our diversification efforts spanning both horizontal and vertical developments in Bengaluru and Ahmedabad are making very, very good progress. We expect to extend these same attributes to Pune and MMR as well with a focus on growing presence in these newer markets. With a strong brand, expanding geographical footprint, innovative product portfolio, prudent capital allocation, a very strong balance sheet with a very significant headroom to raise capital further and a commitment to operating excellence along the governance structures that we have in place already, Arvind SmartSpaces is well positioned to sustain its path of profitable growth. We are progressing well to end the year on a very strong note with a slew of launches in pipeline. On that note, I'll conclude my remarks -- opening remarks, and I would now like to ask the moderator to take over and open the Q&A session.

[Operator Instructions] We have a first question from the line of Biplab Debbarma from Antique Stockbroking.

Congratulations for tremendous...

Sir, we cannot hear you clearly. Can you use your handset, please?

Am I audible?

Yes. Little better, but maybe could have been a little more better.

Okay, sir. My first question is on the launch pipeline and business development pipeline. Can you give us some color on where are we in terms of launch pipeline in the second half and business development, how much -- what is the business development pipeline for us in this...

I'm sorry, your sounding muffled, Mr. Debbarma.

But I think -- I guess I could still hear the question and understand what exactly is expected here. If I may rephrase the question for everybody. Biplab is basically asking for the launch plan from here onwards for the rest of the year. So Biplab, thanks for joining and very good morning. Our launch in the remaining part of the year is -- launch plan is very strong. We are hoping that anything between 4 to 5 projects will be launched within this financial year. And these 4 to 5 projects should carry our top line potential of around INR 1,700 crores to INR 1,800 crores in total. So this is the launch that we are very hopeful that we should be able to bring to the market in the next 6 months' time.

Sir, in terms of business development because I believe in the platform in a positive -- platform 2 with HDFC, we have significant like around INR 700 crores, INR 600-odd crores to be deployed. Do you think in the second half of the financial year we will be able to deploy the entire amount?

Yes. I mean the second part of the question, obviously, was related to the BD side of it. This year has been a very, very strong year in terms of BD and we almost touched INR 2,800 crores of new project pipeline already. But then many of the projects that we've taken out of this INR 2,800 crores of pipeline has come through JD root and hence, that means that we have not really consumed our reserves, our surpluses and our platform money significantly. As we speak, we are yet to deploy INR 750 crores, which is available kind of on tap for the rest of this year. And we are very hopeful that within the next 6 months or 5 months, which are left in this financial year, this additional INR 750-odd crores will be invested and that marks the completion of our INR 1,000 crores overall investment plan that we had in the beginning of the year. So we are very well on track, and we are very hopeful that this remaining INR 750-odd crores will be deployed in the remaining part of this year.

That's great. And my final question is on collection and strong operating cash flow. It's been really -- trend is really very strong. It is growing quarter after quarter. Sir, just trying to understand, Is this strong cash flow and collection, definitely, you have a good sales number, but it is because also that all -- so far all projects have been predominantly horizontal and the same is -- had these project has been a vertical and for similar sales velocity. The collection and operating cash flow, they have been a bit more moderate than what we experienced. Is it -- I'm just trying to -- is it because of the -- I know it's good sales book, but is it mainly because of the projects we are doing, which is basically...

So a very good question. I mean if I have understood the question right and your voice remains a little problematic. But the question essentially is what is the trend going forward in terms of the strong cash flows and is these very strong cash flows also a function of product mix and is horizontal strategy helping the cause of cash flows? So yes, I mean, the cash flows have been very, very healthy. For the first time last quarter, we touched more than INR 100 crores of net cash coming from operations. And then this quarter is even better and it's INR 160-odd crores for the current quarter. So that means almost INR 270 crores plus have been generated from the operations. Now where this cash comes from? Obviously, it is a function of how the products are launched and how well is your selling velocities. So these are obviously always the prime drivers. And they have come out right. We have sold quite healthy in various product categories that we are operating. There are also healthy cash flows coming from established projects like Uplands, et cetera, where sales is happening or the realizations are happening consistently out of the sales that happened in the past. But as you also very rightly mentioned, a significant portion of cash flows and improved cash flow is also a result of our strategy of horizontal development and last 3 to 4 projects which we launched, not only did sell very well, but also because of the very nature of the project, cash flows were front-loaded, and they always are front-loaded, and that has helped the cause as well. But I mean, horizontal doesn't mean only plotting. Horizontal means plotting, horizontal means small villas, row houses, and luxury villas and luxury row houses, et cetera. For example, we just launched -- post this quarter, we've just relaunched our Sarjapur villa project, which was long awaited, a very large one when it comes to this kind of a project with quite dense construction in the form of row houses, et cetera, et cetera. And there also, we are hoping that the way we structured our payments, the way we've structured our overall offering, the cash flows initially and throughout the project will be pretty healthy. We obviously need good velocities to come in that we are hopeful of. Once that is done, of course, that remains the prime driver, our cash flows are supposed to be healthy there as well. So overall, velocity, product mix and everything else has contributed. And of course construction, you still have to achieve certain milestones to get this kind of cash flows that we're talking about. So I think everything is fired, product mix is right product mix as well. And these 3, 4 factors are helping cash flow for us.

We have a next question from the line of Dhananjay Kumar Mishra from Sunidhi Securities.

And congratulations on very excellent set of numbers as well as operating performance. Sir, my question is that we have done very well in terms of launching very quickly of the current project we have acquired, and that is about 4 million we could sell immediately. So how long it will take to complete? Because at this momentum, I guess, because this is plotted development, so is it possible the entire thing in terms of cash flow will be happening within 1 year from this project? And secondly, you also -- you indicated that Sarjapur already on pre-launch stage. So what is the response in terms of booking and all, if you clarify it?

Sure. So I mean, normally, if it is a pure plotting project, it takes anywhere like 1.5 years and thereabouts to realize the money. And that is what is expected as far as this project is concerned. Of course, this project has multiple phases. All we sold is Stage 1 of it, but there is still a very significant potential left, and we are right now preparing to launch more phases and sell more out of the same project. But generally speaking, our plotting project will have a lifespan of around 15 to 18 months, maybe 20 months of time to realize the cash flows...

Sir, large project is streamlined by 2026?

Yes. So this is a very large project. This is -- we are talking about 200-plus acres of plotting and golf course and a very large resort is coming up there. So quite a bit of development work is required. These are very, very highly amenitized world-class infrastructure with resort and golf, et cetera, things. So they will take to complete -- it will take 2.5 to 3 years' time. But to realize whatever we are selling right now, most of it and maybe 85% to 90% money is received within 15-odd months to 18-odd months' time, that we sell these products at. So that's how we in shaping up. Forest Trails, you said -- yes, we just announced, we just relaunched after this quarter. We just have started building the market, meeting with the channel partners, et cetera. Initial response has been great, absolutely great. And the early signs are quite good and we are very happy about with what we're seeing right now. But we'll very soon come out with the numbers, and that will happen sooner than later.

Ideally, it should come in Q3, I mean, Sarjapur?

Q3 -- I mean, yes, you will see numbers coming in Q3 for Sarjapur. It's already kind of pre-launched and market building and selling is started just now. It's not a formal sales, but at least on EOI basis, sales have started already. As we speak, there's a very hectic activity and a lot of rush on the site is happening. So -- yes, I mean, definitely, you'll see some numbers coming in Q3 for this project.

And secondly with the HDFC platform investment, as you said that INR 750 crore yet to be deployed. So what could be the revenue potential? I mean if you -- because we are having just 4, 5 months, so you must have identified in terms of horizontal or vertical what kind of projects are there. So what could be the revenue potential you can create from this revenue, INR 750 crores?

So generally -- I mean, as a thumb rule we can talk and it really varies from product to product and category to category. Investment to top line ratios change dramatically between, say, a plotting project and a built-up high-rise apartment project. But nevertheless if you were to just average quite a few things out, our INR 700-odd crores should mean a INR 3,500-odd crores of top line on a very, very broad average basis, taking both these products through of two extreme sites together. And as you know -- I mean you would know that INR 3,500 crores will mean what kind of EBITDA, et cetera, et cetera, because there is a trend out there. So this is what it is from the fresh investment standpoint. But obviously, our investment or rather our pipeline will have two components. One is the outright purchase projects, which is these numbers, INR 700 crores -- means INR 3,500 crores of top line. But in addition to that, we should also be adding our healthy component of JDs, which requires significantly less money in proportion to the top line and the bottom line that it generates. In fact, as we just mentioned, the first INR 3,000-odd crores of BD that happened this year, INR 2,800 crores to be more precise, a very significant component of that has come from the JDs. And that means we still have a lot of money to invest. And that's why we are talking -- still talking about despite adding INR 3,000 crores odd of BD, we're still talking about INR 750 crores being still there to invest out of INR 1,000 crores that we had. So I mean, depending on how much we do the JDs going forward and continue to do the JDs to that extent, the overall pipeline will change dramatically. But the limited answer to the question you have is INR 700 crores should result into a INR 3,500-odd crores of top line.

And you mentioned this 4, 5 projects we are going to be launched. So of course, you would have included Sarjapur. So which other projects you are going to launch? Is it Doddaballapur and any other you want to name?

So yes, I mean, there are projects which are already declared. Sarjapur is obviously the first one, then we have a project declared at Doddaballapur. And then we have the last phase of Arvind Greatlands coming up very soon. And Uplands Adroda we've launched already Phase 1, but then there are two more projects coming as extension of this project, which are called Uplands Phase 2 and Uplands 3.

3.0 and 2.0.

3.0. So these are the five that we are planning to launch.

Sir, lastly, one clarification.

I'm sorry, I'm sorry. Yes.

Yes. Yes,. You go ahead.

So together these five will have we will have a top line potential of around INR 1,700 crores to INR 1,800 crores.

Yes, that I got. Lastly, just one clarification you was saying that operating cash flow for the first half is INR 270 crores, while in the result, cash flow, I'm looking at, it is showing INR 177 crores. So where I'm missing?

See, the accounting -- I will answer this question. Accounting methodology of cash flows was in a different manner. They are not -- they are based on indirect method of computation of cash flows and even the land cost is part of the operating cash flow because finally land is not an investing activity from accounting perspective, it is more of operating activity.

Got It. Got it. Got it.

So if you take out the land investment which essentially is investment in new projects. If you were to not assume that as operating cash flow negative, then the business has really generated INR 271 crores, but of course INR 100-odd crores has gone into the land already in the new projects out of that.

We have a next question from the line of Abhishek Lodhiya from YES Securities.

Two questions basically. First thing is, we have posted a robust presales of INR 390 crores roughly. Big chunk of it came from the launch side, and we still have 4-, 5-odd million square feet. And from the rest of the projects, we have done only INR 90 crores. So don't you think -- I mean whether this number is a little more skewed towards launches, and we have maybe scored a little lesser in the ongoing projects. First thing is that. Second thing is you said about deployment of INR 700 crores -- INR 750-odd crores for BD. And of that, roughly INR 600-odd crores is from the HDFC platform. And additionally, you keep on saying that we would be doing most of the projects in JD model, right? Then how that economics work on the HDFC platform because then 25-odd percent or a, say, 75 -- 67-odd percent is HDFC. And I understand the waterfall structure and the radial partner taking the bit of it, then what would be left for us? And how does that work out for us? Those are my 2 questions. And sorry, one more question. I mean, see, we, as a company, right now having a launch pipeline of roughly 28-odd million square feet. And we aspire to exhaust that we launch pipeline in the next 1, 1.5 years. So how we should see that with the deployment of this INR 750-odd crores? One -- I mean, we need to keep on doing BD at a maybe better pace or with the -- I mean, a lot more BDs we need to do to keep the momentum going? Those are my questions.

Sure. So one data that you talked about is about INR 750-odd crores of fresh investment. And a very broad breakup, which comes to my mind about the components of this INR 750 crores, is around INR 500 crores to INR 525 crores coming from HDFC platform and our own money to the extent of INR 275-odd crores or thereabout. So that means maybe INR 225-odd crores. So that means there is a very healthy mix of our own funds coming into the play here, and they are maybe more than 33% or thereabouts of the investment that we have planned. And a lot of money has already been invested from our own internal accruals in the past few quarters. Bannerghatta Road, for example, is one such example. At least for the time being, it is all funded through our internal accruals. Now when it comes to what is our skin in the game. From the bottom line sharing point of view, you know that in the new platform, anyway we start with our investment to the extent of 33%. And obviously, our share in profits and cash flows in significantly more than that. And on top of that, we also own our development management fee from the platform. So all put together, so very, very thick skin that we have in the overall business in general. But just to add a little more additional layer into the whole thing. JDs generally are not kept under the platform. In fact, till date, not even a single JD is such where HDFC co-invest with us. JDs are all funded and invested. Anyway investment levels there are small comparatively. And whatever they are, we end up investing JDs ourselves from our internal approvals only. So there is nothing to be shared as far as our JD surpluses are concerned between us and HDFC. And that's the reason why our overall margins, overall profitability and overall percentages in terms of EBITDA to sales, et cetera, remain as a mix pretty healthy in shape.

Sir, that means HDFC platform will only have the outright buy, right?

Correct, correct. That's what has been happening, and that's what the intention is. We don't want to share a project with 3 people in general sense. For example, in a JD, there is already a third party called the land partner. And then we are there. Obviously, land partner gets appreciation on his land because he's there wait it out and take the risk with us. But to have one more partner through platform in a JD structure will mean a little thinner skin for us, and that's what we will not generally prefer unless the investment in JD itself is very big because if the underlying project is supposed to be very big even under JD. And those exceptions are going to be rare, and they have not happened yet. So all the JD projects, the large ones, including the Kalyangadh one, the Adroda one or even the Sarjapur project that we are talking about right now, just got launched this month itself. They're all funded 100% by us and nothing is to be shared with platform or HDFC.

Mr. Lodhiya?

Yes. So -- and about the mix of your sales from launch and new launch and the ongoing one that was something...

Yes, from quarter-to-quarter, you will see these numbers going up and down. As a company, we are still at an early stage of our growth in terms of absolute numbers. And hence, from quarter-to-quarter, you will definitely see some peaks and troughs coming into these 2 segments. Generally, the sale too is pretty healthy. This quarter, we have sold significantly more in the form of new launches. As such going forward, we -- because we have been selling pretty well, the existing inventory value is not that high in any case. Leftovers in most of the projects are very, very manageable and sustainable sales is happening. And that is where you also want to squeeze them out in the leftover bits and price accordingly. So going forward, I see a trend that a significant or rather majority of the sale that you will see will keep coming from new launches. And of course, it will be backed by some healthy and strong momentum in sustenance sales. I don't have a ready number in terms of what is going to be the percentage of new launch versus sustenance sales on a quarter-on-quarter basis. But I'm sure this will be more like a 2/3 coming from new launches and 1/3 coming from sustenance, I mean, as a thumb rule, which we expect for the year as a whole and even going forward.

[Operator Instructions] We'll take our next question from the line of [ Rithwik Sheth ] from One-Up Financials.

Yes...

Sir, can you use your handset, please? You're not audible?

Yes. Is it better?

Yes. Please go ahead.

Yes. Sir, a few questions from my end. Firstly, sir, if you can share some updates on the progress to enter MMR. And also in Pune, we have had 1 project and how do we go from here in Pune as well?

Sure. So generally, in our scheme of things, we are treating Pune and outskirts of Mumbai, which we call as MMR, we treat these 2 markets as 1 market from investment priority standpoint. And hence, we are very actively looking at projects at both these places, MMR and Pune simultaneously with a lot of rigor and vigor. As we speak, there's a very strong team of people out there on the ground and evaluating quite a few options. We have a little final lens as compared to average lands that a developer would be having when it comes to selection of a land parcels for many standpoints, which includes, obviously, the title risk and the regulatory risks and also the profitability, a benchmark that we have for ourselves. But we are very confident that with all these efforts by the end of this year, we should be having at least 1 or 2 projects in our portfolio coming from MMR and Pune.

Okay. Okay. Great. Sir, second question is on the investments of INR 750 crores, which you have mentioned to be spent over the next few quarters, will this be more or less own projects since the first INR 2,800 crores is JDA. So will this be more of own projects that could give us a better balance of JDA and own projects. Is that a fair understanding?

Out of this INR 750 crores, as Kamal Bhai mentioned earlier, around INR 500 crores to INR 550-odd crores is yet to be deployed from the platform. So all the platform money which is deployed is deployed in outright purchases only. Now we are left with another INR 200 crores to INR 250-odd crores, which is our investment. Our investments will definitely go more in JDAs as well as we are -- anyways is open for scouting for our own outright purchases as well. So altogether, we have put in a target of deploying INR 1,000 crores, of which we have significantly deployed. And there's, again, further significant portion, which is yet to be deployed. And of course, we would like to first leverage the platform because that platform exhaustion is the first thing which we are targeting. And post that also, of course, the running has to continue, the show has to continue. So we will continue to invest.

Okay. Okay. Great. Okay. And sir, just one more question. The projects that we've acquired in H1 and the projects which we'll acquire in the coming quarters. Would that be a fair understanding that these projects can be launched in FY '25?

FY '25? '25 will be too far, I would say.

I mean, in one way, it will be faster than that. So whatever we acquire are normally a plotting and a horizontal project takes anything like 4 to 8 months, 9 months' time to launch. And hence, anything acquired this year will definitely be launched next year. But then depending on when during this year we acquired -- something gets acquired in December, for example, should be launched by Q3 of next year itself. So mostly, we are looking at launching quite a few of these -- in fact, all of these by the end of -- before the end of next year.

Right. So basically, if you acquire a project, then we are looking at less than 1 year to launch the project?

Yes. Surely, yes. And if it is a built-up project like the Bannerghatta Road project, we told about this project, right? Bannerghatta project, for example, there's a time line internally that we keep is anything between 6 to 8 months only.

We'll take our next question from the line of Naysar Parikh from Native Capital.

Most of my questions were answered. One question I had was on the finance costs. So I think it's around INR 19 crores or something this quarter. So can you just talk on what all is part of it?

Yes, I'll take this question. See, finance costs typically relates to interest. While you look at our balance sheet and the debt statement, our gross debt is very minimally -- very, very minimal. This significantly represents the portion which we have paid out to HDFC because the HDFC structure works on redemption premium as well as the interest component on the OCD, which we had issued as part of platform 1. Further, whatever OCDs have been issued as part of platform 2 on a fair value basis, the interest cost gets accounted as a part of interest cost.

So the simple answer from the business standpoint is essentially this is the platform money which is getting repaid in one form or the other as for the waterfall mechanism. The way it gets accounted is more like an interest on an instrument way it structured, but this is definitely a long-term patient money, which needs to be paid on a payable when-able basis. And hence, it's not a debt in that sense, and we pay if we earn and we pay when we earn. But essentially, this outflow is getting accounted as an interest component in overall balance sheet in numbers point of view. But otherwise, bank interest or the funds that we would have taken as for pure bad debt, I mean, that number is minimal. In fact, overall, we have surpluses lying in the books of account. To be very precise, this year, we -- this quarter, we've ended at a number of INR 141 crores being the surplus funds waiting to be deployed and hence interest obviously is next to negligible. And this represents outflows to the platform, which is a structured payment stuck into the platform based on the actual cash flows.

Understood. So is this -- there was a growth of around 20% versus last quarter. So moving forward, is this the number we should consider the INR 19 crores, INR 20 crores per quarter is the number -- will happen in the next few...

This was onetime again because the platform 1 was paid off completely during the quarter, and hence these numbers are looking at the levels where they are. On an ongoing basis, we need to consider which is the outstanding OCDs. So that is -- that statement is there as a part of our debt statement. The outstanding OCDs as on date are INR 52 crores. On that, you can definitely assume. On a quarter-on-quarter basis, the numbers will keep growing as we draw from the platform.

Got it. And the second was the other expenses...

Mr. Parikh, I request you to join back the queue, please, as the there are other participants waiting. We have a next question from the line of Ashish from Infinity Alternatives.

Just taking from the last speaker. Sir, just wanted to understand because this interest is effectively a cost of providing the end product. What is the long-term PBT margin that you think that we can target across different products, different models that we have, JDA, et cetera?

PBT could be very different.

Yes. But generally, I mean...

Difficult to predict the future and give you any guidelines is a little bit of something that we avoid. But if you look at the numbers historically, we are hovering anything between 11% to 20% of PAT margins and 26% to 27% of EBITDA margin. Now obviously, PBT is a little a bit higher than the PAT and lower than EBITDA. We don't have any significant component of interest coming in between. But yes, 26% to 27% of EBITDA and 12% odd -- and thereabouts odd of PAT is something that we have been achieving. And going forward, we are hoping that this is the trend that we should be witnessing.

The second question was that while we have seen a very significant growth in our bookings, and assuming an 18 to 24 month time for completion. So if I look at FY '22, we still had INR 500-odd crores of bookings, but the revenue run rate in terms of recognition seems to bit significantly low, but do you think that we should look at the T plus 2 or T plus 3 for estimating the reported revenue number from the booking time?

So I can again give you a little more insights on how it works. Obviously, it also has got a lot to do with the product we sell in individual quarters or individual year, et cetera. For example, a plotting scheme or our general project will get recognized a little earlier. Our plotting scheme, possibly after 15 months to 18 months or maybe maximum of 20, 24 months' time, you start getting into execution of sale deeds and accordingly, proportionately you start recognizing the revenues in the books of account. But our high-rise product, which is, say, 20 floors, 25 floors, et cetera, et cetera, will take at least 3.5 years to complete and start getting into a sale deed mode. So depending upon which project we sell and when, the time varies between 2 years to 3.5 years before we start booking from the launch date, and that's how it'll pan out, and that's how it is logically supposed to be panning out. Right now, quite a bit of sales has happened from -- in the last 2 quarters at least from horizontal launches. And hence, these launches should start getting reflecting -- reflected in books of account in the next 2 years' time. So that's...

So sir, if I were to look at FY '23, we had INR 800 crores of bookings and a large percentage of that was horizontal. So would it be fair to assume that in FY '26, that should get reflected in our P&L by FY '26 then? Or will it be...

I mean I don't think we are very off on this. So broadly, yes. I mean, logically, yes, broadly yes, and it should happen that way, yes.

Yes. So basically, what we are booking this year probably will hit us in our P&L in FY '27. So basically, that will be a 3-year average cycle is what we should assume?

Absolutely right, yes.

Right. Okay. And I have a few more questions, but I'll come back in the queue.

We have our next question from the line of Deepak Purswani from Swan Investments.

As you've highlighted that...

I'm sorry, you are not audible. Can you repeat your question, please?

Is it better now?

Yes.

Sir, just wanted to check out on the strategic direction front. As you highlighted, we would be looking on to invest INR 1000-odd crores over the next 6-odd months including HDFC platform and our own money. Could you also please share directionally what would be the breakup in terms of the horizontal and vertical development? And also any broader guideline in terms of investment or broader metrics impacts on the steady level development? Maybe in Bangalore, what would be the amount we are looking to allocate towards the Bangalore and also Ahmedabad and Ahmedabad and Pune region as a whole?

Sure. So the first question essentially relates to the geographical, for example, mix. So essentially, we want to invest 40%, 40%, 20%, 40% in Bangalore, 40% in Ahmedabad and when I say Ahmedabad, it's the Ahmedabad in Gandhi Nagar. So 40%, 40% between these 2 major cities, where we won't go deeper and maybe 20% going into MMR and Pune put together. So that's how -- that's how it is. Between horizontal and vertical, we have invested a little more in horizontal in the past few quarters. As on date, it is significantly skewed to the extent of 75% and 25%, et cetera. But going forward, I think the skew will change a little and it'll become 50-50 between horizontal and vertical. In fact, we are putting a lot of focus back on vertical at this point in time. That's why we just closed 1 project few weeks back, which is at Bannerghatta Road in Bangalore. And I think that's worth, what, INR 70-odd crores?

Yes. And INR 400 crores top line.

With INR 400 crores of top line. So going forward, the mix should be more like a 50-50 between horizontal and vertical. At the same time, between cities, Bangalore 40%, Ahmedabad 40% and Pune/MMR 20% is what we are looking at.

Okay. And sir, any targeted IRR we are looking out from this investment over a period of time?

IRR obviously, again, depends upon the structure, the product, the mix, et cetera, et cetera. And there are significantly higher IRRs that we're witnessing in horizontal plotting and villa projects as compared to a high-rise project. But generally, our lens says and tells that we take projects only when they exceed anything between 23% to 25% of IRRs when it comes to outright buy of the land. In JD, IRRs are much higher, obviously, because where underlying investment is low. So that's not that relevant of parameter. But nevertheless, it will be significantly higher than 25% general benchmark we have for the rest of it.

We have a next question from the line of Faisal Hawa from H.G. Hawa and Co.

Sir, what kind of digital initiatives we are taking to really have a better hang of the customers who are visiting and of getting probably more footfall into the sample flats for our projects? And can you just enumerate some initiatives you have taken to speed up the construction and even the approvals part of your business? And are we finding it difficult to find more business development executives with the real estate generally booming and falling into more organized hands? That's one. Second question is, sir, that is there anything in mind of the management that how much we will do horizontal -- the bungalows or the row houses kind of development and how much will be the vertical development? Because horizontal does kind of sound to be a very big USP or a very good short cycle construction advantage for our company as opposed to other real estate majors.

Sure. So I didn't really understand the question relating to the digital piece. Are you basically asking how we are ramping up our digital our infrastructure to...

What I meant is there are now several platforms which can help you in selling your inventory very fast and even understanding your customer and really targeting. There is one part where you just build the brand. And there's another part where you have a targeted advertising.

Yes. Correct, correct. So I got your question. I mean digital is something which is very close to our heart. I mean this is a company or a group which essentially is driven by retail, fashion, et cetera, et cetera, and digital piece there also has done great and it's in our DNA to have systems and mechanisms in place, both in terms of people and software, et cetera. So we have a very, very evolved digital strategy under execution and if I were to just to tell you some of the numbers. Our digital sale is possibly one of the highest in this industry. It's more than 1/3 of our sales that we keep clocking over and over again through digital medium and loyalty sales which is a direct sales. In fact, our direct plus digital component, which is essentially driven by a technology in both these cases, is as high as 40% to 45% put together. And obviously, at the scale and size, this is possibly the highest in the industry. And these are the numbers to say that, yes, we are doing something great out there. But behind this, there's a whole piece of hardware and software and people and professionals who are working. We got a disproportionate setup of digital piece here. In fact, this also helps us keep our overall cost of goods sold within a very, very manageable limit. This is possibly again one of the those companies where the COGS is less than 3% persistently throughout. Even when we were INR 100 crores, this was the case. And today, we are at INR 1,000-plus crores, it is the same. And this is possibly one of the lowest in industry put together for the mix that we have. So coming back to the technology and how we do it, very, very stronger, very, very well organized call center operations exist. They are integrated back-end and front-end to a very significant strength. We run on SFDC. We run on SAP, which have seamlessly integrated. For example, we'll know which caller, which customer called, when -- responded when, how many impressions created, what is our funnel looking like, what were the total impressions, what were the total clicks, what was the total walk-in ratios to the clicks, et cetera, et cetera. So these are very, very closely monitored. We've hired some of the best talents in industry. For example, at a very small scale, we were able to hire or we rather hired a person who was heading this function for an organization which is possibly 50x bigger than us and we invested that kind of money very, very early, not only in people and even in software, we invested very, very heavily. And hence, this piece is clicking. This is reflecting in our numbers. Today, as we speak, I can even tell you which hoarding is doing what, whether this hoarding at Hebbal is making more sense or the hoarding at Sarjapur is making more sense and that is stored and appreciated by the system. I can also kind of tell you that if I'm running a campaign on a Facebook or on Insta, then for a project for the same dates, which creative is making more sense. So if I'm showing you a clubhouse for Sarjapur villa project, what is the efficiency of that creative vis-à-vis a villa elevation that I'm showing. So if a villa elevation is resulting in more clicks per impression that we are trying to create. And every impression obviously cost us, then we know that it's time that we put more focus on our villa creative than a clubhouse creative, for example. So these are in-built AI-enabled initiatives, which are already up and running on ground, not now but for the last several quarters. And that is why almost like 1/3 of our sales is coming from digital, and this will obviously means that there is no intermediary and hence that COGS is very, very, very manageable, maybe 1/3 of the normal cost that one does in case channel partners are to be -- sorry?

Prototype for...

Yes. I mean there are several other pieces. This is one of those call center and follow-ups and this and that, et cetera if you see at the funnel. But then we also have technology pieces now at least on beta levels implemented where you could just buy a house like you go on Amazon and buy, without interaction at all. So you could go, climb up, go to the specific floor virtually and see the specific unit virtually and see various angles, see down, look left, look right, look up or whatever and see how to views are in this particular -- on this particular floor. So the whole drone technology comes into these place and shows you actually views from your apartment, your balcony, your bedroom, et cetera. And you also on a run-time basis get to know what is the inventory available. If it's showing its available, you could just go and swipe up a INR 50,000. So we don't take a lot of money through digital direct in-personal sales, but still the customer can at least go, click few buttons and say that I have paid INR 50,000. That means the inventory is block for him and then the physical process will start where people will go, talk to him and explain everything so that there is no ambiguity or no misunderstanding about the project and the product and the offering, et cetera, et cetera, and the process moves from here onwards. So at least you are able to block that inventory online without interacting with any individuals. And the experience of buying a house will actually be better than are you going personally and not being able to climb the same floor in the same flat because it's under construction still. Virtually, you get actually a little better sense then that, for example. So technology is something we're investing, and digital piece is definitely clicking for us. Your next question was related to making construction better, et cetera, et cetera. Of course, this is a complicated question. Put simply, I think India as a market is growing. And the entire supply chain piece of houses is also improving in proportion in tandem. There are some very good quality contractors who shaped up well and you'll see a lot of growth coming into the contactor balance sheet numbers as well. It's about selecting the right guys and having your own systems of control, et cetera, in place. We've invested there as well in terms of various software and monitoring mechanisms that are there. The company is driven by system. This company is driven by IT. And we are very passionate about our systems and process and IT specifically, I personally look into it and this department directly reports to me. And I would know what's happening on technology piece. One more example I can talk hours and hours on this because this is my favorite subject. But just to tell you one more example of this is that we detail our entire records and document management from 10 years back, 100% digitalized. Our system of ticketing where if a smallest level of supervisor has some hurdles in his system or in his execution piece, he can just raise a ticket against the Vice President of some other department saying that, look, your contactor has not turned up, he was supposed to turn up today. And hence, my work is getting hampered and I'm not able to start something that I should have started otherwise. So that ticket is visible to everybody. And the Vice President is supposed to be or forced to be responding to the supervisor and make sure that this ticket specifically is not overdue, and it's kind of acted upon. And these kind of systems are very, very visible and we lived every day. So yes, I mean, these kind of initiatives are helping us. We've delivered most of our projects well in time. And hopefully, we'll continue to do that. Of course, challenge is growing, and that's where we are investing as a company and people et cetera, et cetera front, and we are hopeful that we'll be ready when the orbital change comes -- the next orbital change comes in our operation and size and scale.

And sir, about my question about will be finding it difficult to find like really quality business development executives and all with the overall real estate boom and also the corporatization of the real estate?

Mr. Hawa, I request you to join back the please as there are other participants...

No. This was my question I had already asked.

Sure. Sure. Let me answer this. I accept your question. And I mean every business essentially is a business of people only. I mean, if you got good people, you succeed. If you don't have good people, you don't succeed. I mean it's not about machine, it's not about bricks and it's not about mortars, it's always about finding the right people. So this is one challenge, which is constant and consistent being faced by everybody, not only in this industry and our industry, across the industry, this is the key and this is the mantra. So it's about trying and investing upfront. I mean, at the run time in a live situation to expect that you will find right people all the time is very difficult. And of course, it's becoming more difficult as economy growth, et cetera, et cetera. But it's about realizing and understanding your path and investing upfront. So what we are doing is that we are keeping margins of the work volume, et cetera, which we are anticipating for ourselves and trying to put teams ahead of requirements, at least 3 to 6 months time ahead of our volumes in orbits that we are wanting to operate. So that's one mantra that we're following. We have hired some very impressive talent across industries, across functions, et cetera, in this business upfront. And that's why we are where we are, and we'll continue to invest there. This is a challenge but obviously, there's no option but to appreciate this challenge and act on this challenge.

We have our next question from the line of Bajrang Bafna from Sunidhi Securities.

Congratulations for good -- not good only, it's a great set of numbers during the quarter. So sir, my first question seriously pertains to the trajectory that perhaps as an analyst, we were looking at, it seems like changing for our company and where we have created almost now visible pipeline of INR 4,000 crores to INR 5,000 crores. And this quarter numbers is really soothe to the eyes for our company, where we are almost in the first half inching towards INR 500 crore kind of presales. And we have guided that we'll be growing 25%, 30% during the year. So it looks like the way my sense is that Sarjapur is also on the block, which is going to be launched soon. So is there any possibility of any upward revision of this thought process of, let's say, INR 1,000 crores presales in FY '24? And the kind of pipeline that we have created in the last quarter, any thought process that by FY '25, what is the kind of growth that we are looking at? Or is there any change for our community to see the company slightly superlative in terms of growth parameters, maybe not 20%, 25%, could be 30%, 35%? So that matters a lot for us while analyzing or building the modules and all. So if you could guide in that sense will be really good for us. And purely from a P&L perspective, how do we see next year in terms of delivery of the projects that we have entered in last, let's say, 2 years. So how that P&L purely is going to look like for FY '25? Some sense on that will be really helpful. That's all from my side.

Sure. Thanks Bajrang. Very, very good questions from an analyst standpoint. I mean, we would still like to remain a little conservative when it comes to guiding for the future. But having said that, we've been always telling that 25%, 30% growth is something which should be very much achievable. Of course, if you look at last 3 years, it is much more than 25%, 30% that we're talking about all the time. And the trajectory today, if we see, I can throw a little more light in terms of the building blocks we have and then it is -- it can be left to the imagination and calculation, et cetera, for the analysts to do is that our blocks are very strong. The blocks are stronger than 20%, 25%, 30% expectations. Our major investment is still to hit the market, INR 750 crores would mean INR 3,000 crores, INR 3,500 crores of fresh inventory coming only from the outright projects. Through internal approvals in this itself, we are already at INR 5,500 crores of pipeline sitting today. And this INR 3,500 crores will mean INR 8,000 crores to INR 9,000 crores of total pipeline that we're looking at by the end of this year. This year itself we've added almost like INR 3,000 crores of fresh BD. And hence, 25%, 30% is something which is a number we have been maintaining, but there's a good chance that we could exceed that in the coming years. And on top of that, our strategy of keeping overall mix a little lean in terms of mix between outright and JD is also clicking significant. In fact, one of the major strength that I would like to talk about here is about the brand and not -- and the brand when I see it's not in the context of selling our product to the consumer, but it's also about our brand in the eyes of land partners. I see a great traction coming to this company where a lot of great land partners are wanting to partner with us, and they are willing to take bets on us on some very, very large land partners. Take an example of this Adroda project, Uplands 2, 3 and even Kalyangadh. I mean these are like 300, 400 acres coming to us with very, very minimal investments, every risk in that sense has been taken by the landlord, including conversion, ownership, et cetera, et cetera, and guaranteeing the titles for the entire life cycle of the project, et cetera. I think these kind of large deals have started flowing in and people expect and people hope that we'll do a better job than they doing it themselves or they're doing it from other kind of competitors, et cetera. That's where the brand is clicking very significantly. And a mix of JD and this investment cycle coming back to your question, means that in all likelihood, one should hope that we should be able to exceed the 25%, 30% benchmark that we are always working. But having said, today, we always say that our target is to continue on this trajectory of 25% to 30% growth in all the major parameters that one counts.

Got it. And sir, on the P&L, CFO sir, if you can give some thought purposes that how we are going to see next year in terms of delivering the projects that we have launched in last 2 years?

Project delivery is happening. I mean -- and because we are little heavy today on horizontal, obviously, our completion cycles are shorter on an average basis, original it should be getting complete between 2, 2.5 years and thereabouts, and the vertical ones get completed in 3.5, 4-year cycle. To that extent, our recognition will improve quite a bit in the coming quarters and years for sure. In the overall context, how we pan out, I don't have the ready numbers of generally speaking, maybe I'm more focused on creating the business in the sense of creating fresh pipeline in fresh sales, et cetera, et cetera. Obviously, accounting standard will work its own way and numbers have to come sooner or later. But thankfully, we have a product mix that these numbers will start getting reflected in the books of account faster than the industry average because we are more tilted then the industry average towards horizontal at this point at least. So to that extent, we can get a little more aggressive in our assumptions. But having said that, accounting standard will work the way it is supposed to be working. And we are clearly focused on creating the pipelines and getting the fresh sales and momentum in fresh sales, et cetera, et cetera, because we know once that piece is done and taken care, there is no way, but sort of those numbers to enter into books of accounts sooner than later.

Yes, I totally understand, sir, Kamal sir. But the thing is that now the query was that how the pipeline is going to be created, how the presales pipeline will be built up. So I think we have delivered more than what we have said in the last, let's say, a year or so or maybe 2 years. Now we are building an expectation we want to see the real P&L because that is something maybe out of 100 of analysts, only 5 or 6 will work with the -- maybe presales and all, but 90% of your janta, which is there in the market only understands what you have shown in your P&L. Probably a couple of more, you can say, seasoned investors will be able to understand the cash flow and maybe the pipeline that we have created. But P&L is the end of the day is something which is again a soothe to the eye that how much profit that Arvind has made during this year? So this is something which is also a curiosity. And now we are building an expectation that we also want to see the pipeline or the sales that we have done in the last 2 years, now it should flow into the P&L. Sir, some guidance on that may not be in this quarter, but some guidance purely from next year perspective, if you could guide that would be really helpful for the entire community. That was the whole purpose to just give you this kind of existence.

Bajrang, the point is very well taken, and I really appreciate what you're saying and it absolutely makes sense. I mean fresh sales and pipeline, they're all very important parameters unless they happen, nothing is going to be happening, that's for sure. But then obviously, the actual delivery of numbers in the books of account is equally important for a lot of people as you mentioned. Fortunately, quite a few people have become aware of this nuance of when and how it gets reflected and what's more important, et cetera, et cetera. But having said that, as you said, it's important to know the number and the trajectory. I leave this question to Ankit. Maybe we can connect offline to get whatever information we could share with you, which is as such already available in the form of Investors Presentation at the website. But we'll see what is best analysis that one could achieve within the constraints and realm of compliances, et cetera, that we have in our system and take this forward from their onwards.

We have a next question from the line of Rishikesh Oza from RoboCapital.

Sir, I'm just touching upon what the previous participant had asked about recognition. Sir, we are currently at around INR 280 crores annual recognition run rate. And if I see for last -- 3 years back, we were doing around INR 600 crores of bookings. So would it be fair to say that we should be starting with INR 600 crores of annual run rate -- revenue run rate in H2 or at least in FY '25? Would that be a fair assumption?

See, I would -- to be fair, I think there are multiple questions on revenue recognition. It cannot mean that generally if we have sold INR 600 crores 2 years back, it will come in this year or next year exactly because the products mix is equally important and the product completion and delivery is equally important. So for certain projects, we have already given an indicative completion date in our project portfolio schedules. Based on those -- and those are not RERA-defined schedules. They are our internal estimates only that these are the best estimates for project completion. Now applying the project completion method, we can -- one can easily achieve in terms of what numbers you can expect from each of the project because for each of the project, we have already given how much are the bookings as on date and how much revenue has been recognized as on date also for each of the projects individually. So someone probably can work it out at a project level. It cannot be generalized to overall INR 600 crores or INR 800 crore number.

But yes, I mean, generally speaking, from the information which is already made available in the Investors presentation, one can easily derive this broad projection number. But you are right in saying that average life cycle of our project completion is around 3 years, putting -- horizontal and vertical putting together and more tilted towards horizontal. And hence a quarter or 2 here and there, this trajectory should be like that. I mean there is no reason to believe that we will be very different from what we're talking about here. If 3 years is the number, I think on an average in 3 years for any specific project, we should start seeing some numbers coming into the books of account as a general principle and for the project and product mix that we are talking about here.

The next question is from the line of Akshay Kothari from Envision Capital.

Sir, just one question. Retracement in the Pune market, the project Elan? Hello?

The project Elan?

Yes. Has there been any retracement? Because when I look at from the last quarter, the area sold has reduced. How come that is possible? Is there any return which has happened?

They were, yes, in -- Elan, they were 2 cancellations, which was there and hence the area would have got reduced.

And we have not sold anything in Elan?

What we're doing in Elan is that it's about to be completed. It's a wonderful project, which is about to be delivered and stuff. So -- and because this is only 1 project happening right now, obviously, the effort is to add at least 2 more projects in MMR and Pune going forward. We thought that we'll slow paddle the sales for the time being, a couple of cancellations could be just any other event in the project life cycle per se. But our idea and the understanding was that we could realize significantly higher and better once the project is ready which is about to get ready in next maybe 3 months, 6 months time, this is absolutely done-up project. We're putting more than proportionate efforts in this way to showcase this project. And hence we thought that this 15, 20 units which are left will be sold better when we are done with it rather than burning money today to promote it at a very small scale and then sell and try to do anything which is extraordinary. So that's part of the strategy. I mean, couple of cancellations could be part of the life cycle of the project and can happen at any point in time. There is nothing specific and more to it. But once the project is ready, we should be able to liquidate this very fast because we know what product is coming out. It's just about 3 to 4 months away, and I'm very confident that once people see this project and product will be very happy about and sale should not be a problem.

Sir, second question is on South Bavla Adroda project, which we have taken. The price per square feet is around INR 777 currently. So if I look at the second phase, it comes to be around INR 1,125 per square feet. So is the second phase going to be much more premium than the first phase because the differential is huge as such?

So we -- I mean this project in terms of realization has done wonders for us, and there were some 4 or 5 if I can recollect price hikes which we took in a matter of 3, 4 days, 5 days that we sold this project in. Obviously, as we progress, prices will keep increasing. Even area is changing a little bit. These are large horizonal ones, and we always have a possibility to add and subtract a few numbers. The numbers that you've seen do not include PLCs in my understanding. These are the preference location charges and they are also pretty healthy in terms of overall realizations. Once that is also added into the Phase 1 sales numbers then obviously, the data will not be as we're looking at between the Phase 2 and Phase 1. But yes, I mean, realization has been great, and they are improving.

Okay. Because the competitors in the same area, if I look at Glade One and Alaya by the Zaveri Group, they are priced much more higher.

So Glade One is not exactly the same location. It's very different in terms of its location. Glade One is more like a Southwest and this is clean South that we're talking about. The road themselves are very, very different. The approach is very, very different. In fact on this road, if you were to count and measure, our velocity possibly is 300 to 400x better than any other competitor. And our realization would be at least 30% to 35% higher than the next door competition. The right comparison will be one of the Pacifica projects called Pacifica Forest Trail. That is -- Kings Villa is another, but this is a villa project, but if you have to plotting as a benchmark, then that is what it is. Glade One is a very different location, very different road. It's like Sanand and thereabouts and it's a villa project in that general sense with golf and other things. So quite different in terms of location and the basic land price. If I've to tell you the land price difference between in Adroda and where Glade One is, it's more like INR 30 lakhs to INR 40 lakhs in Adroda on a per villa basis and more like INR 2 crores in case of a Glade One. So 6x.

And Alaya is much more premium project?

I haven't heard of this name, Alaya, yet. Maybe something small by a small developer in the vicinity.

No, no. It's by Zaveri Group, Alaya.

Zaveri Alaya, I haven't really come across. Maybe it some -- it's not on Adroda road. It's not on Glade One road in my understanding. So I don't recollect really what Alaya is. And Zaveri also I'm not sure who Zaveri are.

Ladies and gentlemen, we'll be taking the last question, that is from the line of Harshal Kothari from RV Investments.

So my question is on the line of Ahmedabad area. So basically, we've seen that Ahmedabad is a growing major IT hub. So are we planning to take on corporate offices or data center projects is coming in the Ahmedabad area?

Harshal, I mean, the answer is pretty straightforward. We remain focus on residential in all the markets we're talking about in Ahmedabad, Ghandhi Nagar, Bangalore, Pune, MMR, et cetera. So at this point, we don't have any specific focus on commercial or IT spaces, and that's something which is going to remain like this in the medium term. So as of now, no IT and data center, et cetera. No yield business for that matter. No yield business for the time being except for the cases where it's a adjacency. So if you've got a 10-acre or something going on where 1.5-acre or 1-acre was good for commercial and hence, it was adding the proportionate value, yes. I mean, such things are always welcome. And we've been doing those in bit and pieces here and there in a few projects in our portfolio. But generally speaking, to do a stand-alone IT, commercial, data center projects, the answer is no, at least for the medium term.

And I wanted to ask you that do you have any unused lands for any upcoming projects if comes at a very good district?

So every large project, especially in the horizontal side, will always have left over, it will be a big tail in terms of value. It might be a small tail in terms of area left, but will be a very big tail possibly when it comes to valuation of the tail. And we keep doing that. We did that in Upland. We did that in Beyond Five. We did that in Highgrove. We did that in Chirping Woods, et cetera, et cetera . So hopefully, Kalyangadh, Adroda, Uplands 2, 3, even Greatlands, for example, or even Doddaballapur will have long value tails left and we keep exploiting on those tails. But otherwise as a business model, we don't do any land banking at all. The idea is to very, very quickly at the quickest possible time lines, we want to hit the market once the land is invested in and exit at the quickest possible time. In fact, in between entering and exit also, we say we have a benchmark called the autopilot mode, autopilot mode in a projects means that we sold enough and more to ensure that the project becomes cash positive at least in terms of its expenditures, construction, overhead, selling expenses, et cetera, et cetera. And that should be more like our first burst of sales, which takes care of all these things. So we've been achieving this very quick possible entry, means launch of a project, then the quickest possible autopilot mode. And then the third to exit the project at the fastest possible time. And that means that we don't have any significant inventories or unused land left, except for the LTVC project, as we call them as, the long-term value-creation projects like Greatlands or Uplands, et cetera, where we'll have a longer tail with very high values.

Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Kamal Singal, MD and CEO, for his closing comments.

On behalf of the management, thank you, everybody, for participating in the earnings calls of Arvind SmartSpaces and for your continuous support. I hope we have been able to address most of your queries. However, if we have missed out on any of your questions, kindly reach out to Vikram and he'll be able to answer whatever is left and you can connect him offline any time. I look forward to interacting with you once again next quarter. And once again, I wish all of you a very, very Happy Diwali. Stay blessed, and thanks a lot for sparing time for this call.

Thank you, members from the management team. Ladies and gentlemen, on behalf of Arvind SmartSpaces Limited, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.